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Old 08-30-2014, 08:57 PM   #61
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I'm going with 62. For me, it absolutely means pulling the money from the 403b if I don't take Social Security. The time value of money must be included in the calculations.
A while back I ran a whole bunch of scenarios to try to understand what the choices would mean. It appeared to me (and I think that I am seeing some of this in everyone's responses) that "it depends". (Really helpful, I know.)

For my personal situation, using some round numbers because I can't find the spreadsheets right now there were basically three situations:

1) IF I retired with a net worth less than about $500K, I would HAVE to take SS at 62 just to make ends meet.
2) If my net worth at retirement was greater than, say, $2,000,000, then it was much better to take it at 70 because barring an asteroid, there were there was very little risk of running out of funds and this would maximize my standard of living.
3) BUT, for the range in between, it boiled down to "it depends". It depends on the sequence of returns most importantly. In this range, especially the lower end, NOT having the SS income would cause my stash to become seriously depleted if there were a bad run of years starting off. SS would keep enough of my stash intact to make things viable to the end. If I had a good run of returns at the beginning but was taking SS, then I would end up accepting a slightly lower standard of living in the long run.

This becomes further complicated when adding in different spousal benefit amounts, the inherent uncertainty in predicting life span, differing ages of spouses, etc., etc.

I think that it is just something that requires one to take a deep breath and a long, hard look at the particulars of YOUR situation and make a choice that you can live with. For me, I think that I will delay until 70 but realize that a couple years of badmarket performance may accelerate the choice. Perhaps one of us will collect early and the other wait. But at 55 right now, I am not going to spend too much time obsessing over it. I'll revisit it in detail when I turn 61 and 3/4 or so.
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Old 08-30-2014, 11:54 PM   #62
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Like jjquantz, I see SS as an option. I'm semi-retiring next year at 57 while DW continues to work and I continue to get income. If the portfolio collapses and DW loses her job, then I will collect at 62. If she decides to retire and the portfolio collapses, I will collect at 62.
Otherwise, I will play it by ear. Most likely she will file for spousal benefits and delay until 70, if all works out.
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Old 08-31-2014, 12:27 AM   #63
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I'm going with 62. For me, it absolutely means pulling the money from the 403b if I don't take Social Security. The time value of money must be included in the calculations.
I totally agree that the time value of money should be included in the calculations.

If your objective is to avoid withdrawing from your 403b then 62 is the right answer. However, if your objective is to maximize your wealth, then it might note be.

I have a spreadsheet where I assume a certain amount of retirement savings at age 62 and 4% annual withdrawals and compare the balances between scenarios of starting SS at 62, 66 or 70, including inflation. For me, 66 is better than 62 beginning at age 84 and age 70 is better than age 66 beginning at age 90 assuming a 5% real rate of return.

If I reduce the real rate of return to 2.5%, 66 is better than 62 beginning at age 79 and age 70 is better than age 66 beginning at age 84.

So with the time value of money included, my crossover point is in my eighties depending on the real rate of return assumed.
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Old 08-31-2014, 05:29 AM   #64
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I have at least 3 reasons to delay SS to 70.

Decent genes - reasonable health

We shorted DW on survivor benefits in my pension (she gets 1/4, not 1/2 when I die - for this, we get a larger monthly pension check now - she had to sign off on this decision.) Building the SS survivor benefit makes sense because we don't need the money now.

I want to "burn through" some of my qualified (tIRA and 401(k)) money before RMDs come into play. Now, I have some flexibility in doing this, while RMDs take away this flexibility. Also, SS is slightly less taxed (only up to 85% of it is taxed). Combined with RMDs, I hope to come out a bit better this way. Only time will tell.

I consider this a wonderful problem to have, but YMMV.
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Old 08-31-2014, 06:39 AM   #65
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I totally agree that the time value of money should be included in the calculations.

If your objective is to avoid withdrawing from your 403b then 62 is the right answer. However, if your objective is to maximize your wealth, then it might note be.

I have a spreadsheet where I assume a certain amount of retirement savings at age 62 and 4% annual withdrawals and compare the balances between scenarios of starting SS at 62, 66 or 70, including inflation. For me, 66 is better than 62 beginning at age 84 and age 70 is better than age 66 beginning at age 90 assuming a 5% real rate of return.

If I reduce the real rate of return to 2.5%, 66 is better than 62 beginning at age 79 and age 70 is better than age 66 beginning at age 84.

So with the time value of money included, my crossover point is in my eighties depending on the real rate of return assumed.
So you'd end up with more money or larger budgets starting in your eighties. But can you do as much with the additional money in your eighties as you would in your sixties?
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Old 08-31-2014, 07:38 AM   #66
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So you'd end up with more money or larger budgets starting in your eighties. But can you do as much with the additional money in your eighties as you would in your sixties?
It isn't really a question of that, because you can just spend more of your portfolio in your sixties to make up for delaying your SS since you know the money will be higher in your later years.

In your sixties you could cash in some crap bonds and spend them since you are essentially buying better bonds by delaying SS.
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Old 08-31-2014, 08:09 AM   #67
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So you'd end up with more money or larger budgets starting in your eighties. But can you do as much with the additional money in your eighties as you would in your sixties?
I have never been one who spends all income so your question really doesn't apply. In all cases we would be spending as much as we want to so delaying SS would benefit our heirs and provide longevity insurance against poor investment results later in life.
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Old 08-31-2014, 08:36 AM   #68
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"In all cases we would be spending as much as we want to so delaying SS would benefit our heirs and provide longevity insurance against poor investment results later in life."

I will benefit my heirs by taking social security earlier versus dipping into assets that I could pass on to them. When we expire, our heirs cannot inherit our social security.
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Old 08-31-2014, 08:45 AM   #69
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"In all cases we would be spending as much as we want to so delaying SS would benefit our heirs and provide longevity insurance against poor investment results later in life."

I will benefit my heirs by taking social security earlier versus dipping into assets that I could pass on to them. When we expire, our heirs cannot inherit our social security.
An interesting point of view.
In some cases, the first heir is a spouse. I focus on that aspect. If I take SS at the earliest possible moment, it has a significant effect on what she gets, and what options are available.
I am not there yet, but do not see taking SS at 62. Tentative plan is to wait until FRA.
I think!
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Old 08-31-2014, 08:45 AM   #70
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"In all cases we would be spending as much as we want to so delaying SS would benefit our heirs and provide longevity insurance against poor investment results later in life."

I will benefit my heirs by taking social security earlier versus dipping into assets that I could pass on to them. When we expire, our heirs cannot inherit our social security.
This is the best plan for those who have visited a fortune teller and found out they will not live much past 80.

I do not base our retirement on what level of Mercedes someone else might be able to buy if I kick the bucket early.
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Old 08-31-2014, 10:31 AM   #71
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I had decided to start at SS at 62, but now that I'm there, I've decided to do the "her at 62 / me - spousal at FRA, then my own benefits at 70" plan.

Non and semi COLAed pensions provide our current needs and my only concern is to always have enough, especially in the last years when good care can be expensive. If we leave some on the table, so be it.
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Old 08-31-2014, 02:30 PM   #72
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In your sixties you could cash in some crap bonds and spend them since you are essentially buying better bonds by delaying SS.
This is a good way of thinking about it.

I'm someone with a bunch of bonds. Looking at yields to maturity, and the possibility of inflation as the Fed works out of it's current situation, deferring SS looks like a better deal.
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Old 08-31-2014, 02:51 PM   #73
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If the early cash is invested at 4% interest, the break even point becomes age 81 or so.

.
Have you ever run one of the lifestyle dependent longevity calculators?

For example: Lifespan Calculator – Test Your Life Expectancy || NM
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Old 08-31-2014, 03:18 PM   #74
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As we all should know, taking social security at 62, 70 or anytime in between depends on personal scenarios and tons of variables. To say we should always take it at 62, or 70 is silly. Lots of variables impact the individual's decision. The early collector, at 62, will be guaranteed to be financially ahead for a number of years (around age 80 or so - depends on your assumed rate of return if you are investing it); after that, the delayed SS collector will start pulling ahead. Yes, having the money earlier may be better for quality of life as we have the proverbial go-go, slow-go, and no-go phases of retirement years and many would say our spending goes down as we hit the later phases (except for medical expenses) while desiring the money earlier for things like travel. Yes, by taking it early, you don't spend down your other assets and can leave them to your children/grandchildren/charity...social security doesn't transfer to your beneficiaries. But, we should also consider our individual income tax situations. As an example, one person who collects early may have his total income (social security, annuity, pension, interest, dividends, other...) encapsulated in a single (and lower) tax bracket. If the individual had instead decided to collect at a later point in time, the incremental amount of the larger payout could be all, or mostly, taxed at a higher percentage, especially if you take it at 70 and are also facing RMD withdrawals - this differential is never captured in any tradeoff analysis/discussion. Taking SS at a later age ensures larger payouts and you will eventually catch up and pass the early collectors IF you live long enough - maybe there is a crystal ball telling people how long they will live? I'm not convinced that the rapid increase in lifetimes will continue, even with good genes. Many of us are living a more sedentary lifestyle compared to the prior generation and obesity rates have skyrocketed - this could easily slow down or even turnaround the increasing longevity trend. Some might also factor in the new chemicals/additives in our foods, additional RF energy we are exposed to, an increase in medical/dental/TSA imaging,... that are not all well understood for cumulative effects over 6,7,8,9 decades. On the other hand, collecting later may help ensure a spouse a larger amount. When you collect depends on health, earned income, employment status, legacy planning, available resources to forgo early withdrawals, pending changes in tax code, pending changes to social security, future assets, family situation (kids under 18?), and many many other variables ... There are plenty of good estimators to help with the decision making process (see the SSA web site, some of the big name brokerage houses, AARP...) Good luck.
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Old 08-31-2014, 03:33 PM   #75
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Have you ever run one of the lifestyle dependent longevity calculators?

For example: Lifespan Calculator – Test Your Life Expectancy || NM
Holy cow! That one says I'm going to live to age 94, even though some of my answers were less than ideal. I hope it's right!
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Old 08-31-2014, 04:53 PM   #76
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Remember that Social Security, both the taxable portion and non-taxable portion, are included in your Modified Adjusted Gross Income for Affordable Care Act subsidy eligibility. You'll need to consider this if you are too young for Medicare and are getting your insurance through the Marketplace and getting a subsidy.

This may not apply to the OP, just something to keep in mind.
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Old 08-31-2014, 04:56 PM   #77
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That calculator gave me 94, too.

The coolest one I ever saw was my mother.
I took her to a doctor's appointment one day when she was about 88. The doc was having a slow day and just making conversation when he asked her how long she expected to live.

Mom didn't blink an eye. She said "Well, I'm a lot like my father and he lived to 96. So I guess I'll make it to 96 as well.

Sure enough, she died at 96 just as she predicted.
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Old 08-31-2014, 05:13 PM   #78
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That calculator gave me 94, too.

The coolest one I ever saw was my mother.
I took her to a doctor's appointment one day when she was about 88. The doc was having a slow day and just making conversation when he asked her how long she expected to live.

Mom didn't blink an eye. She said "Well, I'm a lot like my father and he lived to 96. So I guess I'll make it to 96 as well.

Sure enough, she died at 96 just as she predicted.
That is so cool!

Since we got the same score, I just tried it with all of the worst possible answers. It does work - - it said I would die next year.

P.S. - - didn't mean to threadjack. On the topic of the thread, I don't know what would be the best decision for the OP. There really is no one right decision on when to take SS, in my opinion. I am delaying until age 70 but was able to take divorced spousal SS this year while my own SS continues to grow. So, I kind of had my cake and am eating it too.
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Old 08-31-2014, 05:39 PM   #79
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Have you ever run one of the lifestyle dependent longevity calculators?

For example: Lifespan Calculator – Test Your Life Expectancy || NM
That one says I'm gonna make to to 92. Dang, I wanted to make it to 95, the age at which I plan to be shot and killed by a 20-year-old jealous husband.
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Old 09-01-2014, 12:22 AM   #80
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I'm 36, no dog in this fight, but for me, i would delay as long as the market is generally heading up. If it drops into correction territory, then i would file to limit that downside withdrawal early on, with hopefully a bit more than the minimum payout.


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